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MANAGEMENT BY OBJECTIVE

Presentation on

Geeta Nikhurpa(34387)Priyanka Manral(34563)

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WHAT IS MBO

Management by objectives (MBO) is a systematicand organized approach that allows management tofocus on achievable goals and to attain the bestpossible results from available resources.

A process consists of following steps.

The formation of clear, concise statements of objectives. The development of realistic action plans for their

attainment. The systematic monitoring, measuring of performance &

achievement. The taking of corrective actions necessary to achieve the

planned results.

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BACKGROUND

Objective setting and participative

management are integrally linked by:

Allowing employees to participate in the

setting of objectives

Encouraging everyone to work towards

accomplishment of general organizational

objectives

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CONTRIBUTION BY DRUCKER

The term "management by objectives" was first

popularized by Peter Drucker in 1954 in his book

'The Practice of Management'.All managers of a firm should participate in the

strategic planning process.

Drucker's framework enables managers to focus on

new ideas and innovation by liberating them fromthe day to day activities and enabling them to fulfill

firms objective.

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CORE CONCEPT OF MBO

According to Drucker managers should "avoidthe activity trap

Focus on main purpose or objective.

Managers should participate in the strategicplanning process.

Implement a range of performance systems.

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MANAGERIAL FOCUS

MBO managers focus on the result, not the

activity. Delegate tasks by "negotiating a contract of

goals" with their subordinates. No need of detailed dictation about goal. Management by Objectives (MBO) is about

setting objectives and breaking these down

into more specific goals or key results.

http://www.1000ventures.com/business_guide/mgmt_setting_objectives.htmlhttp://www.1000ventures.com/business_guide/mgmt_setting_objectives.html

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MAIN PRINCIPLES

Unity of mgmt action is more likely to occur when thereis pursuit of a common objective.The greater the focus on results on a time scale, the

greater likelihood of achieving them.The greater the participation in setting meaningful work

with accountable results, the greater the motivation forcompleting it.

Progress can only be measured in terms of what one istrying to make

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STEPS IN MBO

Setting of organizational objectives

Formulation of departmental objectives

Establishing goals for subordinates

Establishing key result areas

Review of progress

Performance appraisal and counselling

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5 STEP MBO PROCESS

The Five-Step MBO Process

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MBO FRAMEWORK

MBO provides the basis for making functional

budget estimates.

Evaluation of MBOs provides a way tocommunicate purpose & accomplishments to

the public. MBO provides a way to involve &motivate staff.

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8 KEY RESULT AREAS

Marketing Innovation

Human organization

Financial resources

Physical resources

Productivity

Social responsibility

Profit requirements

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ADVANTAGES

Motivation Better communication and Coordination Clarity of goals concept of SMART goals

SpecificMeasurable

Achievable

RelevantTime bound

Higher productivity

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DISADVANTAGE

Resistance to Change.

Lack of Training.

Emphasis on Short-term Goals.

Lack of Follow-up.

Rigidity.

Limited Application Costly Process

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